Seaboard Corp. has a long and successful history in one of the world’s most challenging business environments — Sub-Saharan Africa.
The Merriam, Kansas, U.S.-based company operates 16 wheat flour mills in 14 African countries as well as commodity trading, grain terminal, baking, pasta, maize milling, feed manufacturing, soy crush and poultry production and processing operations throughout Africa.
What has been the secret to its success in Africa, a place where many foreign companies have tried and failed or decided not to try at all?
“You really have to have people on the ground there that are fairly entrepreneurial and allow them to make decisions,” said Dave Dannov, president of Seaboard’s Overseas and Trading Group in a recent interview with World Grain at the company’s global headquarters. “The fact of the matter is that things change so rapidly over there that you have to be entrepreneurial.”
While many companies doing business overseas make important decisions from afar and expect employees to adapt to their corporate philosophy, Seaboard has had success by applying the opposite strategy in Africa.
“Our model is ‘You are there; you tell us what works best,’” Dannov said. “It works well, but it creates some weaknesses, too, because obviously with decentralization you are only as good as your weakest person or weakest location. But it is the way Seaboard has always operated.”
So when David Bosse, managing director of Seaboard’s wholly owned subsidiary, National Milling Corp. (NMC), in Zambia, proposed building a new five-story flour mill on 25 acres of land outside of Lusaka, replacing a very old mill in the heart of the city, Seaboard executives trusted his judgment and approved a $38 million project that nearly tripled NMC’s daily flour production capacity.
Bosse explained that the opportunity arose when one of NMC’s longtime wheat suppliers wanted to make a deal.
“One of the brothers that owned the farm had a real estate company whose headquarters was next to our old mill on Cairo Road in town,” Bosse said. “He looked out of his office at our site and would ask us, ‘Why don’t you move and give me that piece of land?’ And we said, ‘You’ve got to give us a place to go.’ He responded: ‘As a matter of fact, I’ve got a piece of land on the south side of town.’”
Dannov said it was a rare opportunity for the company to have complete control over every aspect of the construction project, which was conceived in 2015 and commissioned in October 2019.
“Seaboard hasn’t built a full greenfield site since we did so in our domestic milling business back in the 1980s,” Dannov said. “It was literally a piece of land where we could design everything from scratch, exactly how we wanted to with all the flows of inbound raw materials and outbound products. It was a true greenfield project from start to finish. There were no compromises.”
Bosse said Seaboard considered about a dozen designs before it finally settled on one that would include a 5,300-square-meter mill and warehouse, grain storage silos, an administration building, a staff cantina, and roadway that allows trucks to bring wheat to the facility and exit without having to back up or encounter intersecting traffic. The company also debated whether to build one or two mills and what the milling capacity would be. The choices included a mill with 300 tonnes of daily capacity, two 300-tonne-per-day capacity mills or one mill with 600 tonnes of daily capacity. Company officials decided to build a 600-tonne-per-day mill, nearly three times larger than the old mill (210 tonnes).
“A single mill with 600 tonnes capacity is much more efficient than having two mills at 300 tonnes,” Bosse said. “With two mills you would have more motors and other components that would make it less efficient to operate.”
One of the reasons Seaboard decided that constructing a new, larger mill made sense was due to Zambia’s fast-growing population, which is currently expanding by 3.2% per year.
“It’s one of the fastest growing populations in Africa, and even the world,” Bosse explained. “They’ve gone from 13.5 million people to 19 million people in just a few years just in Zambia, not counting the Katanga Province in DRC.”
As in many other developing countries, wheat-based food consumption is on the rise in Zambia — especially in the urban areas — which includes a small but growing middle class that’s not as sensitive to changes in the price of bread, Bosse said.
“That’s part of the reason why we decided on a wheat flour investment at this time and not a maize mill,” he said. “Maize consumption has peaked. It’s only going to grow with population whereas wheat flour is growing more as a staple food.”
Design and construction
The construction project took two years to complete after the company broke ground in 2017.
The complex includes 27,000 tonnes of storage capacity with two large steel bins (8,700 tonnes each) and four smaller ones installed by Global Industries, Grand Island, Nebraska, U.S., with the potential to add another 32,000 tonnes of storage capacity, Bosse said.
“We put pilings in the ground for four more big silos,” he said. “Because of the clay soil, we had to put in $1.5 million worth of pilings on the site.”
Wanting to utilize every square meter of the 25-acre property, the company also left room inside the mill for a maize milling section and has space designated on the property to eventually build a feed mill.
Besides the new flour mill, NMC has two maize mills, a feed mill and a soybean crushing plant in Zambia.
“Our current soybean crushing plant, feed mill and maize mill are in a very tight area in Lusaka, basically sitting on top of each other,” he said. “It’s not an ideal situation and that’s why we’re planning to eventually move the maize mill to the new location. It will free up space to expand the feed business and help us to become more hygienic and to deal with biosecurity issues better.”
One important aspect of the design was the traffic flow for trucks bringing wheat into the facility and those taking flour from the plant. During the peak of harvest season, which runs from September through December, Bosse said it’s not unusual to have 150 wheat trucks show up on the same day.
“Rather than them waiting on the road, we designed the flow so we would have all the road space to accommodate all those trucks,” said Bosse, noting that waiting room facilities were also built for the truck drivers.
Inside the new mill
Bosse described the new plant as the “most modern mill in the region,” featuring the latest model Bühler equipment. The highly automated “lights out” mill is in stark contrast to the previous mill, which featured dated milling equipment inside Lusaka’s second oldest building, which was more than 100 years old, Bosse said.
“With the new mill it’s been a challenge to find workers who can operate it because it is so much more technical than what we had before,” he said. “Our new production manager came from Bühler — he spent a couple of years with Bühler working on mill installations and he also took a turn teaching at Bühler’s milling school in Nairobi , so he is quite a qualified trainer.”
The mill flow, designed in-house by Seaboard, is proprietary, said Jim Gutsch, senior vice-president, engineer, at Seaboard. But he did note that a unique feature of the plant is a LAAB Bühler pre-cleaner at the silo intake with a 200-tph capacity. Otherwise, he said, it is a rather conventional cleaning house that includes a Bühler Combistoner, MVSR aspirator and MYFE moisture controller. He said the milling section features Bühler Diroit four- and eight-roller mills MDDY/MDDZ rollstands as well as Bühler Arenit sifters. At the back end of the production process are two 72-tph carousel packing lines for flour, a smaller packing line for flour and a 20-tph carousel packing line for bran.
Bosse said the flour extraction rate at the new mill is 4% higher than the old mill but declined to divulge the specific percentage. The higher production capacity will allow NMC to ensure enough supply during the high-demand seasons for flour.
“Before, we were being beaten by lesser competitors because we couldn’t produce as efficiently as they could and couldn’t get the volume needed,” Bosse said. “Zambia is a market with a very short business cycle and if you’re not ready when the market goes up, you will miss it very quickly. We could never get that kind of peak-time capacity and meet that growth that was available in the market.”
The potential to produce more flour isn’t the only benefit derived from the new mill.
“We thought we had good flour before, but now the new flour that we’re producing is so good,” he said. “We know we can do a test bake with anybody. We don’t have to do a hard sell, just do the test bake in the bakery and leave the bread on the table.”
Bosse said even before the mill was built, NMC had several distinct advantages over its competition, namely its brand recognition and transportation network.
“We don’t have to spend a lot of money on marketing because we’ve got tremendous brand awareness and appreciation,” he said. “Our products are available in every province.”
NMC’s transportation network is also the envy of the Zambian milling industry. It includes 55 trucks for local deliveries as well as longer hauls throughout the country.
“We have 45 of our own sales outlets and are the only milling company in all of the country’s retail outlets,” Bosse said. “There are five chain stores and we are the only one in all of their outlets.”
The new mill is located by a rail line, but Zambia’s rail system is inefficient and therefore not a viable option for transporting wheat or flour, Bosse said.
Plenty of quality wheat
Unlike neighboring Zimbabwe, whose milling industry has been impacted in recent years by political corruption, a shaky economy and a multi-year drought, making wheat and flour shortages commonplace, Zambia enjoys a relatively stable political situation, a commitment to agriculture and has a modern farming system that includes irrigation that helps offset dry periods.
“Zambian wheat is good milling quality,” said Bosse, noting that NMC sources most of its wheat within a 300-kilometer radius of Lusaka. “The way it is described to me is it’s in between a hard and soft wheat. It has very low moisture. It’s not hard red winter and it’s not French, but something in between. It is a very good all-purpose wheat.”
Bosse said Zambia cultivates a diverse group of wheat varieties, so blending is an important aspect of NMC’s milling strategy.
“We can send wheat to first break from three different silos at the same time to help with the consistency,” he said. “Our bakers tend to appreciate consistency above anything else. It doesn’t have to be the best flour, but it does have to be consistent.”
With that wheat, NMC makes bread flour, cake flour and ready mix, which is popular with the country’s small bakers who are its biggest customers. Only 4% of its sales go to the home baked goods sector and Zambia has only four large plant bakeries.
“With all the small bakeries, the biggest challenge for them is ingredients,” Bosse said. “They don’t want to buy sugar from one guy and salt from another. They don’t have the capacity to adjust so we offer ready mix flour; about 50% of our flour sales are ready mix, mostly in 25- or 50-kilogram bags.”
NMC’s market share in flour is about 30% to 40%, Bosse said. It also has about 40% of the country’s feed market and about a 5% market share in maize meal.
“We’re the only competitor that is strong in all three,” Bosse explained.
Seaboard continues to expand in Africa
Until the early 1990s, National Milling Corp. (NMC) was owned by the government of Zambia, which was a socialist country post-decolonization. But the country began partially privatizing its economy in the mid-1990s and Seaboard bought NMC in 1999.
While Zambia has been a good market for Seaboard’s milling division, Bosse said it requires taking a long-term approach while accepting the bad with the good.
“The markets here are very dynamic,” Bosse said. “The craziest things happen and before you can respond to it, it’s gone away again. Things change so quickly. It’s not a five-year business cycle like in most places; it’s more like a two-year cycle. You start to think that you’re finished and suddenly sales pick up, margins are good, and you don’t know where the demand is coming from, but it roars. But if you only dwell on the dips, you’ll never succeed.”
Explaining Seaboard’s success in Africa, Dave Dannov, president of Seaboard’s Overseas and Trading Group, added, “Really it’s just the fundamental of having been there so long and understanding the risks and how to operate in this type of environment with a long-term view. It’s no more complicated than that.”
In 2018, Seaboard, which has been involved in Africa’s flour milling industry for more than 40 years, increased its footprint by acquiring Groupe Mimran’s flour mill and feed mill in Dakar, Senegal; a flour mill in Abidjan, Ivory Coast; a flour mill in San Pedro, Ivory Coast; and its grain trading business based in Monaco.
David Mimran, president and director general of Grand Moulin d’Abidjan and Grands Moulins de Dakar, said the decision to sell the company was made easier because Seaboard “shares the same values and culture that we have instilled within our business over the years.”
“Just like ourselves, (Seaboard president and CEO) Steve Bresky is the third generation of his family running a substantial business, and I very much look forward to assisting Mr. Bresky and his team in any way we can with respect to this new chapter in the development of the business,” Mimran said.
With the expansion of production capacity in Zambia, Seaboard’s daily flour production capacity in Africa now stands at 10,000 tonnes (wheat equivalent).